Why is Netflix’s Freedom & Responsibility Culture still relevant?

September 8th, 2019 | By Guy Pike, Senior Consultant at Duo

This seems to have been talked about over and over again, but we still struggle to find another example that so perfectly outlines cultural strategy, and the related performance & revenue impact of this done right.

For a couple of years now the company has created real buzz in the HR world around their unique culture, and their powerpoint deck on their Freedom & Responsibility Culture, has been viewed on the web more than 5 million times. This is something we have talked about before, but as all oldies but goodies go, we’re going to talk about it again. Why? Well here’s a couple of reasons…

  • They have been phenomenally successful – They are nearing 150 million in subscribers, recently reported net profit over over $400 million, and just to top it all off, they have won multiple Emmy awards.
  • They began their change as a growing SME (just like you!) – Netflix began to recognise the need for change and shape new philosophies in late 2001 when they had only 120 employees, starting to mould a culture for success to become the company they are today. So their journey is just as relevant to growing SMEs as it is to corporates.

So now we have established why this is worth a read, here’s a couple of Netflix’s pillars for success…

1. Hire only fully formed Adults…

Netflix pride themselves on only hiring responsible adults. By hiring people who make adult level decisions have a passion for high performance and keep the best interests of their company at heart, they believe that 97% of employees will do the right thing. This adult belief system allows the business to provide flexible benefits and incentives, with the same guiding principle “do the right thing for Netflix”. Two of their “non policies” following this ethos are:

  • Unlimited vacation – As long as employees take vacation time that does not interfere with work or projects, they can take vacation whenever they want. Virgin have already taken a leaf from Netflix’s book on this and introduced this non-policy into their US and UK operations.
  • A five word expense policy – “Act in Netflix’s best interests.” In an adult culture, employees spend company money as if it were their own, normally frugally. And by working in this way they eliminate the need for job roles or complicated policies that police expense use.

2. Truthful performance…

Netflix operates an open and honest system to performance management, they hold 360 reviews in which people are asked to identify things that a colleague should start, stop and continue. By being open and truthful there is no need for performance management as it is clear if an employee is performing or not.

3. Managers own team creation…

Team managers at Netflix are encouraged to create winning teams. Unlike many companies, where managers often lack real autonomy, Netflix requires its managers to envision their goals for their team, then build the right team to execute this goal, therefore recruiting only the right people (not a ‘nearly there’ fit). As part of their strategy for attracting the best people, Netflix operate a market value salary scheme. They pay a person what they are worth in the market. If they grow their skills and become more valuable then they get a raise in salary, if they stay the same, their salary does too.

4. Leaders create the culture…

At Duo we see so many businesses where their cultural aspirations and reality don’t quite match up, and often leaders let a culture happen rather than creating the culture they want. Netflix recognised this and challenge their leaders to consistently create the culture needed for the business to be successful. In addition to leading from the front, they have an awareness and take accountability for management of any sub cultures that appear during growth or company change.

5. Replace traditional HR with business innovation…

Many HR teams focus on traditional HR incentives or models, as opposed to thinking like business people and focussing on questions like “how can we ensure employees know what we mean by high performance & revenue growth?” At Netflix, the HR team are held responsible for driving innovation and business strategy through their HR activities to ensure that all are linked to business needs and ROI as opposed to traditional HR KPIs.

To look at how you can look at your cultural strategy, and make it work in way that you need it to to reach your business goals, why not book a free virtual 60 minute culture strategy insight session with one of our team?